Editorials

The Unbanked Tiny Entrepreneurs

Rajen Kumar
Jun 2012
A few days ago, a cycle rickshaw owner approached a lady in our neighbourhood with a request to keep his weekly earnings in safe custody as he has no safe place to keep cash. He would 'deposit' Rs.1000 to Rs.2000 at regular intervals and take back a sizeable amount whenever he would make trip to his native village in Bihar.
 
As per a conservative estimate, in a metro city like Delhi, over 1500 million rupees worth of business is generated everyday by over 2.5 million 'tiny entrepreneurs' such as roadside vendors selling fast food, pan shops, neighborhood Kirana stores, auto and rickshaw wallahs etc. A large chunk of them are migrants from other states and regularly send money to their homes in small cities and villages. The fact remains that they have no banking facility
 
A professional 'event' photographer, migrated from Punjab, was desperate to open a bank account when he received a cheque from his clients. “Can you help me open a bank account?” he sought our help. “Banks are not willing to open my account as I don't know anyone,” he reasoned.
 
We have inadequate banking facilities for the majority of our tiny tradesmen who have hard time managing their earning in safe custody. In metros, most of the banks are large with a negligible presence of small or co-operative banks to cater to the tiny entrepreneurs.
 
It is time we have banking facility for such class of entrepreneurs who may not be borrowers but only depositors. We need to induce the cult of 'banking as a service'. The manager of a public sector bank confided in us: “We generally do not encourage petty traders or vendors as they don't have the required documents like PAN card etc. and introductory reference and moreover they won't be able keep mandatory cash in their accounts.”
 
What risks our banks will have if they have a separate cell for tiny entrepreneurs who can come every other day and deport their earnings. Banks can always set some easy guidelines for them and encourage them to have their accounts in the banks and save them needless anxiety. Such depositors can be given ATM cards for convenience.
Only three years ago, realizing the need for financial inclusion, Reserve Bank of India had set time-bound targets and assigned banks to reach the unbanked, who were estimated at 480 million and mostly living in India's 630,000 villages. The targets were ambitious: about 72,800 villages with a population of above 2,000 to have banking access by March 2012 and all 348,000 villages with a population of above 1,000 by March 2013. That means almost 70% of villages will be covered. We don't know if the first target has been met or not.
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